Ad spends on boom by E-commerce companies

The E-commerce companies Juggernaut

A few of e-commerce players will most likely upset the pecking order of the India’s largest advertisers in a year. Thanks to the aggressive media attacks by players such as Myntra, Snapdeal, Jabong,Flipkart, OLX,Amazon and Quikr, e-commerce as a category has been seen an over three to four fold rise in ad spends in a year. From a mare Rs 200-300 crore last year, spends by e-commerce companies have now touched whooping Rs 1,000 crore, as per Anupriya Acharya, Group CEO, Zenith Optimedia. Her assessment is based on the fast pace at which these firms have been placing digital,television and OOH ads in the past few months.

“In single year’s time,” she says, “ad spends by these players is expected to cross the INR 2,000 crore mark.” Zenith Optimedia, branch of the Publicis Group, takes care of the media duties of agencies like Jabong and OLX in India.

Acharya, incidentally, is not the lone senior media agency professional who is feeling this way. Other senior executives such as Suresh Balakrishna, CEO, BPN India, a media company part of IPG Mediabrands,P M Balakrishna, COO, Allied Media, part of the Percept Group feel the same way.

“Yes, it’s true that e-commerce is a Rs 1,000-crore plus category in terms of all over advertising today,” as per Bala krishna of Allied Media India.

E commerce India

“In many aspects, it is e-commerce which is building up (in terms of advertising) at same time when other categories, mostly fast-moving consumer goods(FMCG) , are actually going towards south on spends as the consumer slowdown. This speed of growth shown by e-commerce is only expected to grow further for the next 3 to 4 coming years,” as per Bala krishna .

At INR 1,000 crore, e-commerce companies together are spending more than half of what India’s largest advertiser Hindustan Unilever (HUL) is spending. Hindustan Unilever’s ad budget is estimated to be approx Rs 2,200 crore. Within a year’s time then, the E-commerce category will cross the ad budget of the country’s largest advertiser.

Already, e-commerce industry has surpassed bulge-bracket advertising spenders such as Nestle,Coca-Cola, LG and Samsung ,whose ad budgets, according to media marketing industry estimates, are in the range of Rs 600-800 crore. Ad Spenders such as Karbonn, Micromax,Panasonic, Amul and Sony, that fall in the Rs 200-300 crore range, according to media planners, were left far behind months ago by the e-commerce boom.

Why the hurry to advertise?

“The reason behind is growth. What we are able to see now is like the beginning of a movie,” says Arvind Singhal, head, Technopak Advisors, a Gurgaon based retail consultancy firm tracking the e-commerce industry sector closely. “E-commerce is the next phase and this sector is estimated to grow because there are so many constraints in terms of growth of organised retail sector in India. Foreign Direct Investment (FDI) in multi-brand retail has not taken off yet.Space and rentals are a limiting factor there. That leaves traditional business trade, which will grow by default, but it is not motivational in nature. So increasingly and exponentially, it is the online medium companies that will fuel the growth story . There are no or limited constraints in terms of space,resources and time as far as the online medium goes”.

From $1.5 billion (About Rs 9,000 crore) last year, e-commerce as an sector now stands tall at $3 billion (Rs 18,000 crore) in size and is expected to touch $35 billion (Rs 2.1 lakh crore) by 2020, as per Technopak. Categories expected to grow traffic will be fashion, lifestyle products, accessories,electronics, mobiles and groceries. The chances of new players stepping into the fray will only increase the advertisement pie, experts say. “Most of the BIG e-commerce companies in the world are eyeing the Indian market. Alibaba (of China) and Rakuten (Japan) have already shown interest to step into the Indian online market, which will not only increase the profile of this category but could also start a new advertising war to watch,” says Balakrishna of Percept Media.

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